CPGs leverage eCommerce channels to bolster sales

Many consumer product good brands, which include manufacturers of consumable products such as soap, paper towels, razor blades and other similar items, have traditionally been sold in physical stores just because of the nature of the products. People run out of these goods and for most customers, it is simply easier to take a trip to a nearby retail location and acquire these goods.

This means that many CPG brands were unable to sell directly to customers. For companies in this sector, working with retailers is often mandatory as a result. While the manufacturer-retailer relationship has been mutually beneficial for ages, there is no denying that relying on merchants comes with its downsides as well. For example, merchants are the ones collecting all the data and information about the people who are purchasing products, rather than the manufacturers themselves.

While most CPG brands still work with retailers, many have increasingly turned to selling directly to customers with their own online stores.

However, digital channels may change that. While most CPG brands still work with retailers, many have increasingly turned to selling directly to customers with their own online stores. For CPG brands in particular, improvements in order fulfillment make same-day delivery less of a dream and more of a reality – a growing number of product manufacturers have identified ways to execute this today.

Now, instead of having to squeeze in a trip to the store after a long day of work, customers can simply order soap, paper towels or other CPG goods online and expect the package on their doorstep when they get back later that day.

By selling directly to the customer online, approximately half of CPG brands found they could realize cost reductions of between 6 and 10 percent. These savings stem not only from taking out the middle man to increase margins, but also improvements in warehouse management, production and transportation from selling directly to customers, according to a report from Accenture and Forrester.

Digital channels benefit the retailer and the product manufacturer

Leveraging online channels is a beneficial approach for CPG brands, not only because it helps them engage customers, but also interact with merchants. Just as retailers can use inventory management tools to effectively gauge how much stock they have at each location and channel, the product manufacturers themselves found they were better able to coordinate with online retail stores that stocked their merchandise.

“CPG brands need to enable secure, authenticated transactions across the public Internet, delivering scalable collaboration with retailers and distributors”

“CPG brands need to enable secure, authenticated transactions across the public Internet, delivering scalable collaboration with retailers and distributors and delivering the practical capability to serve the 1 billion new middle-class consumers in emerging markets,” the report added.

According to a report from Accenture and Forrester, 50 percent of CPG brands said they could confirm current availability by store, which helps CPG brands extend their reach by ensuring these stores are always stocked with their merchandise.

Selling directly while embracing the retailer relationship

While selling directly to customers and using digital tools and channels can benefit merchants extensively, that does not mean they should completely try to remove the retailer from their chain either. Rather, selling directly should just be an additional channel for driving revenue and enhancing brand relationships with customers.

Leveraging retailers still comes with numerous benefits. For most CPG brands, even if people buy their products in store, that does not necessarily mean they have the clout to get people shopping on their own websites. People think first of making purchases with retailers, so many CPG brands will need a really strong relationship with customers to get them to buy directly from the manufacturer, and until CPG brands develop that relationship, retail partnerships will be their best way of selling product.